German economy roars early

German economy roars early

On the southeastern edge of Berlin, two companies tell a contrasting story about Europe's largest economy as it heads into 2006 amid hopes for a robust recovery.

At Berlin-Chemie, production of pharmaceuticals for Russia and 30 other countries in Europe and Asia is going full tilt. A goal of increasing turnover 20 percent in 2005 was "far exceeded," said chief executive Reinhard Uppenkamp.

The firm's payroll, which fell from 2,800 to 400 after German unification in 1990, swelled 500 worldwide last year to around 4,000. Around a third of the new hires were in Berlin.

"The health industry is a sector with a future ... From 2010 there will be a mega trend," said Uppenkamp, predicting a further rise in staffing as the company eyes expansion in new markets such as China and elsewhere.

At television tube maker Samsung SDI Germany GmbH, one metro stop away, it is a different story. 710 workers are resigned to losing their jobs on March 1 despite a lengthy battle to stop production at the 50-year-old site being moved to Hungary.

"One can get the impression there's a general problem (with the economy) because of the plant closures," said Wolfgang Kibbel, head of Samsung's works council, citing lay-off plans at other Berlin firms including JVC Video Manufacturing Europe GmbH and construction machine maker CNH Baumaschinen GmbH.

Data this month showed Germany's economy grew 0.9 percent last year, down from 1.6 percent in 2004, almost entirely due to exports from companies like Berlin-Chemie. Adjusted for working days, growth was unchanged at 1.1 percent.

With full export order books encouraging manufacturers to invest - capital investment rose in 2005 by the most since 2000 - analysts are optimistic growth will accelerate this year by up to 2 percent, which would be the best rate in six years.

"I again expect exports to be lively," said Ralph Wiechers, chief economist of the VDMA plant and equipment makers' association, citing demand from oil producing countries for industrial infrastructure, roads and airports.

"Sentiment at home is also good. It looks like we will finally get the hoped for investment-driven upswing," he added.

Competitiveness cramping consumers

Germany's new grand coalition government of conservatives and Social Democrats has been quick to claim credit for the upbeat mood, dubbing it the "Merkel factor" after Chancellor Angela Merkel took office in November.

But the gross domestic product data also show that were it not for exports the picture would be very different.

Private consumption, which accounts for nearly two thirds of the economy, stagnated for a fourth year in a row as workers' wages fell for the first time in 15 years and nervous households increased their rate of saving for a fifth consecutive year.

Updated : 2021-02-28 12:35 GMT+08:00